Marshall Auerback recently posted in support of raising the minimum wage, joining Jamie Galbraith in advocating for it. This caused some disagreement among bloggers sympathetic to Modern Monetary Theory (MMT).
In particular, Rodger Malcolm Mitchell expressed his disagreement with Marshall in a straightforward critique, proposing an alternative and much more comprehensive initiative designed to move the economy toward the 5 goals Marshall set out in his post. The dispute received a very good discussion at Mike Norman’s site, with the main point being that everyone would favor Rodger’s alternative if it could be passed, but that Marshall’s proposal was much easier to get passed.
To this point, beowulf, a blogger and commenter much respected in MMT and Modern Monetary realism (MMR) circles, added a number of lively comments about the desirability of raising the minimum wage that I think are worth blogging here. He said:
“Minimum wage laws are like hummingbird wings. In theory they shouldn’t work at all, in the real world they work pretty well.
Australia’s minimum wage was just bumped to A$15.96 an hour, US$16.84.hr at today’s exchange rate. Unemployment rate is 5.2%.
Think about that, their U3 rate is three points lower AND their minimum wage is more than double ours. Either the Coriolis effect makes neoclassical economics work backwards in the Southern hemisphere, or mainstream economists are a bunch of astrologers who think they’re Carl Sagan.
$16.84/hr is high enough that a full time worker making that here would be means-tested out of food stamps, section 8 and other income security programs.
So what’s going on is Australia puts the cost of a living wage for the working poor on their employers instead of taxpayers, enabling govt spending to be focused on other needs– like universal Medicare and a Social Security system so broad it would impress even Rodger Mitchell.
Then later on he added:
“One other thing, this John Stossel post last month may be the most mendacious thing I’ve read all year.
“Statists say that Australia is proof that minimum wage laws help workers. They point to Australia’s 5.1% unemployment rate… But statists ignore the details.
“Most people who earn minimum wage are young, unskilled workers. How are they doing in Australia?
“In June, Australia’s unemployment rate for workers age 15 to 19 was 16.5%.”
“That’s digging pretty deep for an unemployment stat. Curious that Stossel neglected to mention the comparable US stat (for workers 16 to 19). In June, their unemployment rate was…26.6%.
That Coriolis effect is CRAZY.”
And then he added a bit more:
”OK, this is really the last one…
“According to the Heritage Foundation/WSJ “2011 Index of Economic Freedom”, Australia’s “government spending as a percentage of gross domestic product (GDP)” is less than that of the United States; 34.3% vs 38.9%.
“Stop and think about that… universal Medicare (with dental!), a jumbo size Social Security system, a defense policy of jumping into the same wars we do (including Vietnam and Iraq) and Australia still spends less on government than we do. At risk of sounding hyperbolic, I”d say that Coriolis effect is strong enough to move hurricanes (and cyclones). :o)”
These are great comments, and I’ll draw out their implications a little further.
– First, Australia is one of many nations with minimum wage rates way above our own. They’re no exception. Internationally, they’re closer to the rule; and among major nations, we are the shameful exception.
– Second, a recent Credit Suisse study shows the United States is 24th in the world in Median Wealth per adult. One of the reasons for this certainly can be the sad state of the minimum wage rate compared to other nations.
– Third, when a prediction is correct in theory, but not in the real world; then the most likely explanation is that the theory that says it won’t work is wrong. Capish? And
– Fourth, when will American legislators, politicians and political parties treat American citizens and their constituents at least as well as the legislators, politicians, and political parties of other democracies?
That is the question that has been blowin’ in the wind for at least 35 years now. Time to retire this group of bozos, crooks, and corporate ideologues.
And while we’re at it, let’s not forget the Justices of the Supreme Court. At least five of them need impeachment badly before they complete the turnover of this country to the corporations!
(Cross-posted from Correntewire.com.)